As if it's not already enough the provincial government is taking more money from us in the form of utility rate increases and school taxes, they continue to hose us through a stealth form of taxation known as "bracket creep."

What is bracket creep Even though it was eliminated by the federal government in 2000, a cause the Canadian Taxpayers Federation championed with great success, there are many Manitobans today who still do not understand what it is or how it adversely affects them.

Essentially, bracket creep is what happens when governments choose (or
refuse) to increase the levels of income tax brackets each year by the rate of inflation. When taxpayers receive inflation based pay raises, governments collect more tax dollars by leaving the income tax brackets alone, causing taxpayers to slowly creep upwards from one tax bracket to the next.

Prior to 1986, full-indexation protected inflation-driven incomes from over-exposure in the income tax system. But in 1986, the system was partially de-indexed. As a result, Canadians paid an extra $90 billion in taxes to federal and provincial governments over the next 14 years as more of their inflation-driven incomes were taxed at higher rates. Between 1989 and 1999, a $40,000 income earner paid an extra $9,418 into federal and provincial coffers thanks to bracket creep.

The re-introduction of full indexation of the tax system in the 2000 federal budget put an end to this silent, annual hidden tax grab. Thankfully, several provincial governments followed suit and re-indexed their tax regimes. Unfortunately, three provinces have not. Manitoba, Newfoundland and Labrador and P.E.I. have all allowed bracket creep to continue unabated.
Perhaps it should be no surprise Newfoundland and Labrador and P.E.I also happen to be Manitoba's cousins in the "have not" category of welfare recipients via federal transfers.

So crafty is bracket creep that most taxpayers don't even see it coming.
Like a dazed fighter in the ring, taxpayers are getting clobbered by the NDP government with one sucker punch after another. In spite of minor increases to the basic personal exemption, reductions in the middle tax rate (in 2002 the province increased the threshold from $61,089 to $65,000 where it remains today), and income tax relief offered by the federal government, Manitobans are still paying more.

According to a recent study by the Canadian Federation of Independent Business (CFIB), Manitoba taxpayers have lost $100 million in tax savings since 2000 because the NDP government has refused to index our tax brackets to the rate of inflation. The CFIB's numbers show that Manitobans earning $60,000 will save $253 with recent tax cuts, however, if tax brackets had been indexed, the savings would be closer to $600.

In short, we are getting ripped off.

However, the real challenge is trying to convince the government that indexation is not only sensible fiscal policy but good social policy as well. Indexation of tax brackets ensure low-income Manitobans (like those on fixed incomes and seniors) are allowed to keep as much of their hard earned and precious dollars in their pockets as possible. Full indexation is fundamental to keeping demand for welfare assistance and entitlement schemes to a minimum.

There are also significant political advantages to the provincial government ending bracket creep. In addition to offering tax relief to over-taxed Manitobans, the ruling NDP could knock the wind out of the sails of opposition parties by neutralizing a key component of their respective tax platforms.

From here on in, the devastating effects of bracket creep rest squarely on Gary Doer's shoulders - e-mail, call or write to him and tell his government to end this crafty, stealth form of taxation. After all, it is your money.